SoftBank Group’s Masayoshi Son has made no secret of his intent to double down on red-hot artificial intelligence industry. Now, he’s fundraising for his next move in that strategy. Based on a report in Bloomberg, the SoftBank founder is searching for $100 billion to construct a brand new enterprise that might compete with the likes of Nvidia in the world of AI chips.
Code-named Izanagi, the brand new enterprise would collaborate with Arm, the chip design company that SoftBank spun out as a public company last yr. It still owns about 90% of the Arm’s stock as of this month.
Following a number of the same playbook that SoftBank used when pulling together its outsized Vision Fund investment funds, the report said that it plans to tap Middle East-based institutional investors for about $70 billion of the $100 billion sum. SoftBank itself would foot the remaining $30 billion itself.
When contacted by TechCrunch for a response to the report, a SoftBank spokesperson declined to comment.
Nvidia currently dominates the AI chip market with its GPU chips. But with the necessity for AI processors projected only to grow — and with quite a bit more work to be done to enhance efficiency and price — there’s a transparent opening for others to compete with alternatives, whether or not they are like-for-like GPUs, latest approaches to GPUs or a completely different processing approach altogether.
OpenAI chief Sam Altman is reportedly also in talks with investors within the United Arab Emirates to boost an eye-watering $5 trillion to $7 trillion for a brand new AI chip project. OpenAI’s efforts are particularly notable because the corporate has been leading the charge in generative AI development, each to power other services with its GPT models, and to power its own services like ChatGPT.
All that makes OpenAI one in every of the largest customers on the earth at once for these chips, and makes chips one in every of OpenAI’s biggest expenses. Altman has reportedly met with quite a few potential investors, chip industry experts and others across the globe, including SoftBank’s Son, for the brand new AI chip initiative. It seems that the Izanagi project is separate from Altman’s AI chip ambition, the Bloomberg report said.
The small print of the SoftBank’s latest project haven’t been disclosed, including which corporations would construct the core technology and timelines.
Shift focus (from Alibaba) to AI
A brand new chip project can be line with the corporate’s latest give attention to AI.
SoftBank has historically made an enormous a part of its strongest returns from its early investment and stake in Chinese e-commerce titan Alibaba, which has yielded it greater than $70 billion through the years. But since March 2023 — when, SoftBank chief financial officer Yoshimitus Goto said that the corporate was “on the point of go on the offensive with the AI revolution on the horizon” — it’s been progressively selling off parts of its stake to reinvest the cash into AI.
The move into AI could have been characterised as offensive going by Goto’s comment, nevertheless it was also defensive: it got here a few yr after SoftBank reported a $32 billion loss within the Vision Fund, its high-profile, high-stakes effort to develop into a significant player and kingmaker on the earth of juggernaut startups.
Yet SoftBank, thanks partly to that 90% remaining stake in Arm, has seen a solid recovery. Returns for the Vision Fund within the last quarter were the very best for the reason that March 2021, and Arm’s shares have soared almost 50% due to rising demand for AI chips. (It helps too that Nvidia, one in every of Arm’s customers, has a stake within the chip design firm, a disclosure that led to a spike in Arm’s price last week.) “Arm would soon be indispensable to AI,” Goto claimed earlier this month.
Arm, acquired by SoftBank in 2016 for $32 billion, listed on Nasdaq in September 2023, with the IPO valuing the British chip design company at $54.5 billion.
Arm’s customers, along with Nvidia, include smartphone makers and chip designers, including Apple, Google, Microsoft, and Amazon within the designing and operation of huge language models.
SoftBank posted its first quarterly profit for the quarter that ended December 31, 2023, nearly three years after 4 straight losses, helped by gains at its Vision Fund. Shares of SoftBank closed 2.8% higher on Monday after Son’s AI chip project news broke on Saturday.
